UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.  )

Filed by the Registrant þ
Filed by a Party other than the Registrant o

Check the appropriate box:

o		Preliminary Proxy Statement
o		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ		Definitive Proxy Statement
o		Definitive Additional Materials
o		Soliciting Material Pursuant to §240.14a-12

 

E. I. du Pont de Nemours and Company

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

þ		No fee required.
o		Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

	(1)		Title of each class of securities to which transaction applies:
	(2)		Aggregate number of securities to which transaction applies:
	(3)		Per unit or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
	(4)		Proposed maximum aggregate value of transaction:
	(5)		Total fee paid:

o		Fee paid previously with preliminary materials.
o		Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

	(1)		Amount Previously Paid:
	(2)		Form, Schedule or Registration Statement No.:
	(3)		Filing Party:
	(4)		Date Filed:

 

Annual Meeting — April 30, 2008

 

March 20, 2008

 

Dear Stockholder:

 

You are invited to attend the Company’s 2008 Annual Meeting on Wednesday, April 30, 2008, at 10:30 a.m. local time in the DuPont Theatre, DuPont Building, Wilmington, Delaware.

 

The enclosed Notice of Annual Meeting and Proxy Statement provide information about the governance of our Company and describe the various matters to be acted upon during the meeting. In addition, there will be a report on the state of the Company’s business and an opportunity for you to express your views on subjects related to the Company’s operations.

 

To make it easier for you to vote your shares, you have the choice of voting over the Internet, by telephone, or by completing and returning the enclosed proxy card. The proxy card describes your voting options in more detail.

 

If you are a registered stockholder or if you hold DuPont Common Stock through a Company savings plan, your admission ticket for the Annual Meeting is included on your proxy card. If you hold shares in a brokerage account, please refer to page 1 of the Proxy Statement for information on how to attend the meeting. If you need special assistance, please contact the DuPont Stockholder Relations Office at 302-774-3034.

 

In 2007, DuPont delivered strong results, overcoming challenges and benefitting from rapid growth in emerging markets, higher returns on innovation, and continued cost and capital productivity gains. The Annual Meeting gives us an opportunity to review our progress. We appreciate your ownership of DuPont, and I hope you will be able to join us on April 30.

 

Sincerely,

 

C. O. Holliday, Jr.

 

E. I. du Pont de Nemours and Company

March 20, 2008                    

 

 

To the Holders of Common Stock of

E. I. du Pont de Nemours and Company

 

 

NOTICE OF ANNUAL MEETING

 

The Annual Meeting of Stockholders of E. I. DU PONT DE NEMOURS AND COMPANY will be held on Wednesday, April 30, 2008, at 10:30 a.m. local time, in the DuPont Theatre in the DuPont Building, 1007 Market Street, Wilmington, Delaware. The meeting will be held to consider and act upon the election of directors, the ratification of the Company’s independent registered public accounting firm, stockholder proposals described in the Proxy Statement and such other business as may properly come before the meeting.

 

Holders of record of DuPont Common Stock at the close of business on March 5, 2008, are entitled to vote at the meeting.

 

This notice and the accompanying proxy materials are sent to you by order of the Board of Directors.

 

Mary E. Bowler

Secretary

 

 

 

Registered stockholders may request their proxy materials be delivered to them electronically in 2009 by visiting www.computershare.com/us/ecomms and holders of shares in the Company’s U.S. employee benefit plans may request that their proxy materials be delivered electronically by visiting www.econsent.com/dd. Stockholders with brokerage accounts can determine if their brokers offer electronic delivery by visiting www.icsdelivery.com.

 

 

2008 ANNUAL MEETING OF STOCKHOLDERS

Proxy Statement

 

 

Proxy Statement

 

 

The enclosed proxy materials are being sent to you at the request of the Board of Directors of
E. I. du Pont de Nemours and Company to encourage you to vote your shares at the Annual Meeting of Stockholders to be held April 30, 2008. This Proxy Statement contains information on matters that will be presented at the meeting and is provided to assist you in voting your shares.

 

The Company’s 2007 Annual Report on Form 10-K, containing management’s discussion and analysis of financial condition and results of operations of the Company and the audited financial statements, and this Proxy Statement were distributed together beginning March 20, 2008.

 

Who May Vote

 

All holders of record of DuPont Common Stock as of the close of business on March 5, 2008 (the record date) are entitled to vote at the meeting. Each share of stock is entitled to one vote. As of the record date, 900,403,949 shares of DuPont Common Stock were outstanding. A majority of the shares voted in person or by proxy is required for the approval of each of the proposals described in this Proxy Statement. Abstentions and broker nonvotes are not counted in the vote. At least a majority of the holders of shares of DuPont Common Stock as of the record date must be present either in person or by proxy at the meeting in order for a quorum to be present.

 

 

How to Vote

 

Even if you plan to attend the meeting you are encouraged to vote by proxy. You may vote by proxy in one of the following ways:

 

 

When you vote by proxy, your shares will be voted according to your instructions. If you sign your proxy card but do not specify how you want your shares to be voted, they will be voted as the Board of Directors recommends. You can change or revoke your proxy by Internet, telephone or mail at any time before the polls close at the Annual Meeting.

 

 

How to Attend the Annual Meeting

 

If you are a registered shareholder or if you hold stock through one of the savings plans listed below, your admission ticket is attached to your proxy card. You will need to bring your admission ticket, along with picture identification, to the meeting. If you own shares in street name, please bring your most recent brokerage statement, along with picture identification, to the meeting. The Company will use your brokerage statement to verify your ownership of DuPont Common Stock and admit you to the meeting.

 

Please note that cameras, sound or video recording equipment, or other similar equipment, electronic devices, large bags or packages will not be permitted in the DuPont Theatre.

 

 

1

 

Shares Held In Savings Plans

 

If you participate in one of the following plans, your voting instruction card will include the shares you hold in the plan:

 

•  DuPont 401(k) and Profit Sharing Plan

•  DuPont Powder Coatings USA Profit Sharing Plan

•  DuPont Retirement Savings Plan

•  DuPont Savings and Investment Plan

•  Pioneer Hi-Bred International, Inc. Savings Plan

•  Solae Savings Investment Plan

•  Thrift and Savings Plan for Employees of Sentinel Transportation LLC

 

The plan trustees will vote according to the instructions received on your proxy. If proxies for shares in savings plans are not received by Internet, telephone or mail, those shares will be voted by the trustees as directed by the plan sponsor or by an independent fiduciary selected by the plan sponsor.

 

Proxy Statement Proposals

 

At each annual meeting stockholders are asked to elect directors to serve on the Board of Directors and to ratify the appointment of the Company’s independent registered public accounting firm for the year. Other proposals may be submitted by the Board of Directors or stockholders to be included in the proxy statement. To be considered for inclusion in the 2009 Annual Meeting Proxy Statement, stockholder proposals must be received by the Company no later than November 19, 2008.

 

For any proposal that is not submitted for inclusion in next year’s proxy statement, but is instead sought to be considered as timely and presented directly at the 2009 Annual Meeting, Securities and Exchange Commission rules permit management to vote proxies in its discretion if the Company: (1) receives notice of the proposal before the close of business on February 3, 2009 and advises stockholders in the 2009 Annual Meeting Proxy Statement about the nature of the matter and how management intends to vote on such matter; or (2) does not receive notice of the proposal prior to the close of business on February 3, 2009.

 

Stockholder Nominations for Election of Directors

 

The Corporate Governance Committee recommends nominees to the Board of Directors for election as directors at each annual meeting. The Committee will consider nominations submitted by stockholders of record and received by the Corporate Secretary by the first Monday in December. Nominations must include a statement by the nominee indicating a willingness to serve if elected and disclosing principal occupations or employment for the past five years.

 

Proxy Committee

 

The Proxy Committee is composed of directors of the Company who vote as instructed the shares of DuPont Common Stock for which they receive proxies. Proxies also confer upon the Proxy Committee discretionary authority to vote the shares on any matter which was not known to the Board of Directors a reasonable time before solicitation of proxies, but which is properly presented for action at the meeting.

 

Solicitation of Proxies

 

The Company will pay all costs relating to the solicitation of proxies. Innisfree M&A Incorporated has been retained to assist in soliciting proxies at a cost of $10,000 plus reasonable expenses. Proxies may be solicited by officers, directors and employees of the Company personally, by mail, or by telephone or other electronic means. The Company will also reimburse brokers, custodians, nominees and fiduciaries for reasonable expenses in forwarding proxy materials to beneficial owners of DuPont Common Stock.

 

2

Secrecy in Voting

 

As a matter of policy, proxies, ballots and voting tabulations that identify individual stockholders are held confidential by the Company. Such documents are available for examination only by the independent tabulation agents, the independent inspectors of election and certain employees associated with tabulation of the vote. The identity of the vote of any stockholder is not disclosed except as may be necessary to meet legal requirements.

 

Strong corporate governance is an integral part of the Company’s core values, supporting the Company’s sustainable growth mission. DuPont is committed to having sound corporate governance principles and practices. Please visit the Company’s website at www.dupont.com, under the “Investor Center” caption, for the Board’s Corporate Governance Guidelines, the Board-approved Charters for the Audit, Compensation and Corporate Governance Committees and related information. These Guidelines and Charters may also be obtained free of charge by writing to the Corporate Secretary.

 

 

DUPONT BOARD OF DIRECTORS

	1.	Regardless of other circumstances, a Board member will not be deemed independent if he/she does not meet the independence standards adopted by the New York Stock Exchange (see below), or any applicable legal requirement.
	2.	Except in special circumstances, as determined by a majority of the independent members of the Board, the following relationships will be considered not to be material relationships that would affect a Board member’s independence:

	(a)	If the Board member is an executive officer or employee, or any member of his/her immediate family is an executive officer, of a bank to which the Company is indebted, and the total amount of the indebtedness does not exceed one percent of the total assets of the bank for any of the past three years.
	(b)	If the Board member or any member of his/her immediate family serves as an officer, director or trustee of a charitable or educational organization, and contributions by the Company do not exceed the greater of $1,000,000 or two percent of such organization’s annual consolidated gross revenues, including annual charitable contributions, for any of the past three years.

	3.	If a Board member has a relationship that exceeds the thresholds described in Section 2 above, or another significant relationship with the Company or its management that is not described in Section 2 above, then the Board will determine by a majority of the independent members whether that member’s relationship would affect the Board member’s independence.
	4.	The Board will consider all relevant facts and circumstances in determining independence.
	5.	Any determinations of independence made pursuant to Section 3 above will be disclosed in the Company’s annual meeting proxy statement.

	(a)	If the Board member is, or has been within the last three years, an employee or any member of his/her immediate family is, or has been within the last three years, an executive officer of the Company;
	(b)	If the Board member is a current employee/partner, or if any member of his/her immediate family is a current partner or a current employee of the Company’s auditor that participates in the firm’s audit, assurance or tax compliance (but not tax planning) practice, or the Board member or his/her immediate family was within the last three years (but is no longer) a partner or employee of the firm and personally worked on the Company’s audit within that time;
	(c)	If the Board member or any member of his/her immediate family is, or in the last three years has been, employed as an executive officer of another company where the Company’s present executive officers at the same time serve/served on that company’s compensation committee;
	(d)	If the Board member is a current employee, or if any member of his/her family is a current executive officer, of another company that makes payments to, or receives payments from, the Company for property or services which exceed the greater of $1,000,000 or two percent of the other company’s annual consolidated gross revenues for any of the last three years; or
	(e)	If the Board member, or a member of his/her immediate family, has received more than $100,000 in direct compensation from the Company (other than director and committee fees and pension or other forms of deferred compensation for prior service which are not contingent in any way on continued service) during any twelve-month period within the last three years.

 

6

 

7

 

 

The following chart shows the current committee membership and the number of meetings that each committee held in 2007.

 

     C = Chair

     * Not standing for election

 

 

Directors fulfill their responsibilities not only by attending Board and committee meetings but also through communication with the Chairman and CEO and other members of management relative to matters of mutual interest and concern to the Company.

 

 

In 2007, eleven meetings of the Board were held. Each director attended at least 87% of the aggregate number of meetings of the Board and the committees of the Board on which the director served. Attendance at these meetings averaged 93% among all directors in 2007.

 

 

As provided in the Board’s Corporate Governance Guidelines, directors are expected to attend the Company’s Annual Meeting of Stockholders. All directors, except Alain J.P. Belda (who retired from the Board in April 2007), attended the 2007 Annual Meeting.

 

 

The Board of Directors has adopted written policies and procedures relating to the approval or ratification of “Related Person Transactions.” Under the policies and procedures, the Corporate Governance Committee (“Governance Committee”) (or its Chair, under some circumstances) reviews the relevant facts of all proposed

 

8

Related Person Transactions and either approves or disapproves of the entry into the Related Person Transaction, by taking into account, among other factors it deems appropriate:

 

 

No director may participate in any discussion or approval of a Related Person Transaction for which he/she or any of his/her immediate family members is the Related Person. Related Person Transactions are approved or ratified only if they are determined to be in the best interests of DuPont and its stockholders.

 

If a Related Person Transaction that has not been previously approved or previously ratified is discovered, the Related Person Transaction will be presented to the Governance Committee for ratification. If such Related Person Transaction is not ratified by the Governance Committee, then the Company shall either ensure all appropriate disclosures regarding the transaction are made or, if appropriate, take all reasonable actions to attempt to terminate the Company’s participation in such transaction.

 

Under the Company’s policies and procedures, a “Related Person Transaction” is generally any financial transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) or any series of similar transactions, arrangements or relationships in which: (i) DuPont was, is or will be a participant; (ii) the aggregate amount involved exceeds $120,000 in any fiscal year; and (iii) any Related Person had, has or will have a direct or indirect material interest. A “Related Person” is generally any person who is, or at any time since the beginning of DuPont’s last fiscal year was: (i) a director or executive officer of DuPont or a nominee to become a director of DuPont; (ii) any person who is known to be the beneficial owner of more than five percent of any class of DuPont’s outstanding Common Stock; or (iii) any immediate family member of any of the foregoing persons.

 

Certain Relationships and Related Transactions

 

As discussed above, the Governance Committee is charged with reviewing issues involving independence and all Related Person Transactions. DuPont and its subsidiaries purchase products and services from and/or sell products and services to companies of which certain of the directors of DuPont, or their immediate family members, are executive officers. The Governance Committee and the Board have reviewed such transactions and relationships and do not consider the amounts involved in such transactions material. Such purchases from and sales to each company involve less than either $1,000,000 or two percent of the consolidated gross revenues of each of the purchaser and the seller and all such transactions are in the ordinary course of business. Some such transactions are continuing and it is anticipated that similar transactions will occur from time to time. The spouse of Ms. Kullman, an executive officer, is Director-Corporate Marketing at DuPont and received total compensation in 2007 valued at $340,000, which is commensurate with that of his peers.

 

 

Stockholders and other parties interested in communicating directly with the Board, Presiding Director or other outside director may do so by writing in care of the Corporate Secretary. The Board’s independent directors have approved procedures for handling correspondence received by the Company and addressed to the Board, Presiding Director or other outside director. Concerns relating to accounting, internal controls or auditing matters are immediately brought to the attention of the Company’s internal audit function and handled in accordance with procedures established by the Audit Committee with respect to such matters, which include an anonymous toll-free hotline (1-800-476-3016) and a website through which to report issues (https://reportanissue.com/dupont/welcome).

 

 

The Board has adopted a Code of Business Conduct and Ethics for Directors with provisions specifically applicable to directors. In addition, the Company has a Code of Conduct applicable to all employees of the Company, including executive officers, and a Code of Ethics for the Chief Executive Officer, Chief Financial Officer and Controller. The Code of Business Conduct and Ethics for Directors, the Code of Conduct, and

 

9

Code of Ethics for the Chief Executive Officer, Chief Financial Officer and Controller are available on the Company’s website (www.dupont.com) under Investor Center, Corporate Governance. Copies of these documents may also be obtained free of charge by writing to the Corporate Secretary.

 

 

The Office of the Chief Executive (OCE) has responsibility for the overall direction and operations of all the businesses of the Company and broad corporate responsibility in such areas as corporate financial performance, environmental leadership and safety, development of global talent, research and development and global effectiveness. All eight members are executive officers.

 

 

The Audit Committee of the Board of Directors (the “Committee”) assists the Board in fulfilling its oversight responsibilities with respect to the external reporting process and the adequacy of the Company’s internal controls. Specific responsibilities of the Committee are set forth in the Audit Committee Charter adopted by the Board and last amended and restated effective February 1, 2004. The Charter is available on the Company’s website (www.dupont.com) under Investor Center, Corporate Governance.

 

The Committee is comprised of five directors, all of whom meet the standards of independence adopted by the New York Stock Exchange and the Securities and Exchange Commission. Subject to stockholder ratification, the Committee appoints the Company’s independent registered public accounting firm. The Committee approves in advance all services to be performed by the Company’s independent registered public accounting firm in accordance with the Committee’s Policy on Pre-approval of Services Performed by the Independent Registered Public Accounting Firm. A summary of the Policy is attached to this Proxy Statement at Appendix “A.”

 

Management is responsible for the Company’s financial statements and reporting process, for establishing and maintaining an adequate system of internal control over financial reporting, and for assessing the effectiveness of the Company’s internal control over financial reporting. PricewaterhouseCoopers LLP (PwC), the Company’s independent registered public accounting firm, is responsible for auditing the Company’s consolidated financial statements, for attesting to Management’s Report on Internal Control over Financial Reporting, and for assessing the effectiveness of internal control over financial reporting. The Committee has reviewed and discussed the Company’s 2007 Annual Report on Form 10-K, including the audited consolidated financial statements of the Company and Management’s Report on Internal Control over Financial Reporting, for the year ended December 31, 2007 with management and with representatives of PwC.

 

The Committee has also discussed with PwC matters required to be discussed by Statement on Auditing Standards No. 61 (Communications with Audit Committees), as amended. The Committee has received from PwC the written disclosures required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees) and has discussed with PwC its independence.

 

The Committee has considered whether the provision to the Company by PwC of limited nonaudit services is compatible with maintaining the independence of PwC. The Committee has satisfied itself as to the independence of PwC.

 

Based on the Committee’s review of the audited consolidated financial statements of the Company, and on the Committee’s discussions with management of the Company and with PwC, the Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

 

AUDIT COMMITTEE

 

Lois D. Juliber, Chair

Curtis J. Crawford

John T. Dillon

Eleuthère I. du Pont

Sean O’Keefe

 

10

 

Nonemployee directors receive compensation for Board service which is designed to fairly compensate directors for their Board responsibilities and align their interests with the long-term interests of stockholders. An employee director receives no additional compensation for Board service.

 

The Compensation Committee, which consists solely of independent directors, has the primary responsibility to review and consider any revisions to directors’ compensation. The process for setting director pay is guided by the following principles:

 

 

 

With the assistance of Frederic W. Cook & Co., Inc., the independent compensation consultant retained by the Compensation Committee, the Committee closely monitors trends in director compensation in the marketplace.

 

The compensation program for nonemployee directors for 2007 and 2008 is described in detail in the chart below:

 

 

The Company does not pay meeting fees, but does pay for or reimburse directors for reasonable travel expenses related to attending Board, committee, educational, and Company business meetings. Spouses are invited occasionally to accompany directors to Board-related events. In such situations, the Company pays or reimburses travel expenses for spouses. These travel expenses are imputed as income to the directors and are grossed up to cover taxes. Details are reflected in the following 2007 Directors’ Compensation table:

 

11

2007 DIRECTORS’ COMPENSATION

 

 

 

		Outstanding Stock Awards				Outstanding Option Awards
Name		at December 31, 2007(a)				at December 31, 2007
R. H. Brown			5,071				20,000
R. A. Brown			2,298				—
B. P. Collomb			2,298				—
C. J. Crawford			5,071				20,000
J. T. Dillon			5,071				8,700
E. I. du Pont			4,420				—
M. A. Hewson			2,510				—
L. D. Juliber			5,071				20,000
M. Naitoh			5,071				20,000
S. O’Keefe			5,156				—
W. K. Reilly			5,071				20,000
Former Directors
A. J. P. Belda(b)			2,739				20,000
C. M. Vest(b)			2,739				20,000

 

12

 

 

		2004
Dividend yield			3	.2%
Volatility			26	.42%
Risk-free interest rate			3	.1%
Expected life (years)			4	.5

 

 

Stock Ownership Guidelines

 

Stock ownership guidelines require each nonemployee director to hold DuPont Common Stock equal to a multiple of two times the annual retainer. Directors have up to five years from date of election to achieve the required ownership. As of the end of 2007, six of eleven directors met or exceeded the ownership requirements. The five remaining directors have several more years to achieve the guideline level.

 

Deferred Compensation

 

Under the DuPont Stock Accumulation and Deferred Compensation Plan for Directors, a director may defer all or part of the Board retainer and committee fees in cash or stock units until a specified year, until retirement as a director, or until death. Interest accrues on deferred cash payments and dividend equivalents accrue on deferred stock units. This deferred compensation is an unsecured obligation of the Company.

 

13

Retirement Income Plan

 

The Company’s retirement income plan for nonemployee directors was discontinued in 1998. Nonemployee directors who began their service on the Board before the plan’s elimination continue to be eligible to receive benefits under the plan. Annual benefits payable under the plan equal one-half of the annual Board retainer (exclusive of any committee compensation and stock, RSU or option grants) in effect at the director’s retirement. Benefits are payable for the lesser of life or ten years.

 

Directors’ Charitable Gift Plan

 

The Directors’ Charitable Gift Plan was established in 1993. After the death of a director, the Company will donate five consecutive annual installments of up to $200,000 each to tax-exempt educational institutions or charitable organizations recommended by the director and approved by the Company.

 

A director is fully vested in the plan after five years of service as a director or upon death or disability. The plan is unfunded; the Company does not purchase insurance policies to satisfy its obligations under the plan. The directors do not receive any personal financial or tax benefit from this program because any charitable, tax-deductible donations accrue solely to the benefit of the Company. Employee directors may participate in the plan if they pay their allocable cost.

 

Accidental Death and Disability Insurance

 

The Company also maintains $300,000 accidental death and disability insurance on nonemployee directors.

 

14

 

The 12 nominees for election as directors are identified on pages 15 through 17. With the exception of A. M. Cutler, all nominees are now members of the Board of Directors. One current director, M. Naitoh, is not standing for election. Mr. Naitoh is retiring pursuant to the age 70 retirement policy in the Board’s Corporate Governance Guidelines.

 

The Board has determined that, except for C. O. Holliday, Jr., the Chairman and CEO, each of the nominees is independent within the independence requirements of the New York Stock Exchange listing standards and in accordance with the Guidelines for Determining the Independence of DuPont Directors set forth in the Board’s Corporate Governance Guidelines. See pages 5-6.

 

The Board knows of no reason why any nominee would be unable to serve as a director. If any nominee should for any reason become unable to serve, the shares represented by all valid proxies will be voted for the election of such other person as the Board of Directors may designate following recommendation by the Corporate Governance Committee, or the Board may reduce the number of directors to eliminate the vacancy.

 

The following material contains information concerning the nominees, including their recent employment, other directorships, and age as of the 2008 Annual Meeting.

 

 

15

 

16

 

17

 

Set forth below is certain information, as of December 31, 2007, concerning beneficial owners known to DuPont of more than five percent of DuPont’s outstanding Common Stock:

 

		Number of Shares				Percent of Shares
Name and Address of Beneficial Owner		Beneficially Owned				Outstanding
Capital World Investors			46,219,200(1)				5.1%(1)
333 South Hope Street
Los Angeles, CA 90071

 

The following table includes shares of DuPont Common Stock beneficially owned by each director and nominee, by each executive officer named in the 2007 Summary Compensation Table on page 34 and by all directors and executive officers as a group as of December 31, 2007 (unless otherwise noted).

 

Under rules of the Securities and Exchange Commission, “beneficial ownership” includes shares for which the individual, directly or indirectly, has or shares voting or investment power, whether or not the shares are held for the individual’s benefit.

 

 

18

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Directors and executive officers are required to file reports of ownership and changes in ownership of DuPont Common Stock with the Securities and Exchange Commission. In 2007, one report for R. A. Brown, one report for B. P. Collomb and one report for S. O’Keefe covering one transaction each were filed late because of an administrative error.

 

No member of the Compensation Committee was at any time during 2007 an officer or employee of DuPont or any of the Company’s subsidiaries nor was any such person a former officer of DuPont or any of the Company’s subsidiaries. In addition, no Compensation Committee member is an executive officer of another entity at which one of the Company’s executive officers serves on the board of directors.

 

The Compensation Committee of the Board of Directors has reviewed the Compensation Discussion and Analysis (“CD&A”) section included in this Proxy Statement.

 

The Compensation Committee has also reviewed and discussed the CD&A with management.

 

Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the CD&A be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007 and this Proxy Statement.

 

The members of the Compensation Committee of the Board of Directors have provided this report.

 

COMPENSATION COMMITTEE

 

John T. Dillon, Chair
Richard H. Brown
Curtis J. Crawford
Eleuthère I. du Pont

 

19

 

At DuPont, we are focused on accomplishing our mission of sustainable growth, which we define as increasing stockholder and societal value while decreasing our environmental footprint throughout the value chains in which we operate. We strive to accomplish growth and innovation within our core values, which include: safety and health, environmental stewardship, highest ethical behavior, and respect for people. The executive compensation programs at DuPont are designed to attract, motivate, reward and retain the high quality executives necessary for the leadership of the Company and accomplishment of its strategies. The following principles guide the design and administration of those compensation programs:

 

 

An important aspect of the Compensation Committee’s annual work relates to the determination of compensation for Company executives, including the CEO. In 2007, the Compensation Committee (the “Committee” for purposes of this CD&A) retained Frederic W. Cook & Co., Inc. (“Cook”) to serve as an independent compensation consultant to the Committee on executive compensation matters. Cook performs work at the direction and under the supervision of the Committee, and provides advice, research and analytical services on a variety of subjects, including compensation of named executive officers (“NEOs”), nonemployee director compensation, and executive compensation trends. In 2007, the Committee engaged Cook to undertake a project related to the design of the Company’s 2008 short-term and long-term incentive programs, with specific emphasis on development of performance criteria designed to meet the Company’s pay for performance and retention objectives.

 

Our Board of Directors, upon recommendation of the Committee, establishes the plans that govern our various compensation programs and elements. Specific governance of those plans is outlined below; further information is presented in the discussion of each compensation element:

 

 

20

Competitive Analysis

 

At DuPont, we benchmark compensation levels primarily against published compensation survey information that represents large companies with median revenue comparable to ours (“Market”), including surveys by Towers Perrin, Mercer, Watson Wyatt Data Services and Hay Group. We believe that this approach assures a consistent benchmarking for the CEO, other NEOs and other employees.

 

We also use a select group of peer companies (“Peer Group”) to benchmark pay design (mix, performance criteria, etc.), measure financial performance, and test the link between pay and performance. Peer Group compensation information is used only for the CEO and only as a secondary data point to test the results of our competitive Market analysis.

 

In 2007, the Committee, with input from management and Cook, revised our Peer Group. The new Peer Group will be effective for 2008 and beyond and represents the multiple markets in which we compete — including markets for executive talent, customers and capital — and is comprised of large U.S.-based companies with a strong scientific focus and/or research intensity and a strong international presence.

 

To help guide the selection process in an objective manner, the Committee and the Company established the following criteria for selecting the new Peer Group.

 

 

Strong science capabilities have been the driving force behind our transformation over the past decade. Our new Peer Group reflects that transformation through a concentration on research intensive companies with a scientific focus and a parallel move away from commodity-based chemical companies, such as Dow and PPG.

 

The new Peer Group includes the following companies:

 

3M Company			Ingersoll-Rand Company Limited
Abbott Laboratories			Johnson & Johnson
Air Products & Chemicals, Inc.			Johnson Controls, Inc.
Baxter International Inc.			Kimberly-Clark Corporation
The Boeing Company			Merck & Company, Inc.
Caterpillar Inc.			Monsanto Company
Eastman Kodak Company			Motorola, Inc.
Emerson Electric Co.			The Procter & Gamble Company
Hewlett-Packard Company			Rohm and Haas Company
Honeywell International Inc.			United Technologies Corporation

 

Total Compensation Review

 

In addition to reviewing external compensation practices, the Committee reviews all components (including perquisites) of the current and historic compensation of the CEO and other NEOs. The 2007 analysis included a comprehensive review of past compensation actions and the development of detailed tally sheets for the CEO and other NEOs. Tally sheets permit the Committee to bring together, in one place, all of the elements of actual and potential future compensation of the CEO and other NEOs, as well as information about wealth accumulation, so that the Committee may analyze both individual elements of compensation (including mix) as well as aggregate total amount of actual and projected compensation.

 

Tally sheets used for 2007 included the following information: current base salary, current short and long-term incentive opportunities, cash compensation history (including short-term incentives), equity award history (with potential values), cash flow history and stock option exercise history, as well as a review of the benefits that would become payable upon various termination scenarios.

 

21

Pay Equity Multiple

 

Since the early 1990’s, we have tested CEO compensation relative to next level executives to establish an internal competitive benchmark to safeguard against excessive CEO compensation. In 2006, to create stronger program parameters, the Committee revised the Pay Equity Multiple practice to expand the comparison group from the second level executive to include all active NEOs, and to apply a pay equity multiple of two to three times total cash compensation, reflecting the broader target compensation levels of this expanded group. Using NEOs as the comparison group provides for a stable group not dependent on titles and gives us the further advantages of transparency and the ability to compare to the Peer Group or other companies.

 

In addition, given the significant role long-term incentives play in CEO compensation, the Committee specifically monitors long-term incentives and has established a pay equity multiple of three to four times total direct compensation, which includes long-term equity awards.

 

We will strive for consistency of both multiples over the long term, with the understanding that the Committee may need flexibility to address any potential concerns, which may have a short-term impact on the multiples.

 

 

Our executive compensation programs support our business strategies by providing incentives to executives to grow the business, increase earnings, improve return on investments, and grow stockholder value, all in a manner consistent with our values. In addition to aligning executives’ interests with those of the stockholders, we recognize the individual and team performance of each executive in meeting our business objectives.

 

 

We believe that a performance-oriented program which provides competitive compensation, maintains internal equity and is cost effective, allows us to attract and retain superior executive talent and remain true to our executive compensation philosophy and core values.

 

Our executive compensation program consists of the following components:

 

 

Base Salary

 

Base salaries serve as the foundation of our compensation program. The majority of other executive compensation elements, including annual short-term incentives, long-term incentives, and retirement benefits are driven from base salary or the midpoint of the salary structure. Consistent with our policy for all employees, base salaries for the CEO and other NEOs are targeted at the Market median.

 

Management establishes salary rates and develops recommended salary increases for NEOs on the basis of performance, responsibilities, experience, market competitiveness, tally sheet review and internal equity.

 

The Committee reviews management’s recommendations and approves any base salary change for each NEO.

 

The Committee reviews CEO Market and Peer Group data provided by Cook and, in executive session without management present, develops a recommended base salary increase for the CEO, based on performance, competitiveness, tally sheet review and internal equity. Final compensation actions for the CEO are approved by the independent Board members.

 

22

Annual Short-Term Incentives

 

The cash-based award component (“STIP”) of our Equity and Incentive Plan (“EIP”) is designed to align participants with our annual goals and objectives and stockholders’ interests. The STIP provides approximately 6,400 employees, including the CEO and other NEOs, with a compensation component that is directly linked to our financial and operational performance for the year.

 

Management recommends and the Committee approves STIP targets for all participants, based on an evaluation of Market medians. In addition, at the beginning of each performance year, the STIP target for the CEO is reviewed by the Committee and approved by the independent Board members based on competitive Market data. At the conclusion of each performance period, the CEO’s STIP award is reviewed by the Committee and approved by the independent Board members.

 

For 2007 and the past several years the formula used to calculate STIP awards has been:

 

[(Corporate Performance × 50%) + (Business Unit Performance 50%)] × Individual Performance × STIP Target

 

At the beginning of each fiscal year, the Committee approves the performance measures and weightings assigned to each measure. These performance measures were selected to drive sustainable, profitable growth and return on investment in the business markets in which the Company competes. For 2007, those measures and weightings were:

 

 

The measures of EPS, ROIC and business unit ATOI that are used for calculation of STIP awards exclude significant items, as defined for our internal reporting purposes. Although not in accordance with Generally Accepted Accounting Principles (GAAP) in the United States, we believe that these measures are appropriate because they provide a more realistic view of the operating performance of our individual business units.

 

23

For the CEO and other NEOs, the final performance determination for 2007 was as follows:

 

			2006 EPS					2007 EPS					Payout Factor
EPS — year over year (excluding significant items)				$2.88(1	)				$3.28(1	)				114%
			Target					2007 Actual
ROIC — versus Target				16.3%					16.2%					99%
Corporate Factor (Avg. of EPS and ROIC)														107%
Weighted Average Business Unit Factor														114%
Overall Payout Factor (Avg. of Corporate and Business Unit Factor)														111%

 

		2006				2007
EPS (excluding significant items)		$	2.88				$3.28
Significant Items			0.50				(0.06	)
Reported EPS			3.38				3.22

 

Total annual STIP award payout is limited to 20% of consolidated net income before significant items after deducting six percent of net capital employed. Each year the Committee reviews operating results, excluding all significant items, in determining the overall limit on STIP awards. This ensures that the amount available for STIP awards fluctuates in relation to the Company’s operating results. Over the past ten years, the Committee has approved payments on average of 46% of the maximum available, ranging from 31% to 87%. The final 2007 STIP award payout pool of $163 million was 31% of this maximum available amount.

 

STIP Changes for 2008

 

For 2008, the STIP awards will be determined based on the following measures and weightings:

 

 

24

 

Long-Term Incentives

 

Objectives

 

We also provide long-term and “at risk” incentive compensation under our Stock Performance Plan and EIP to accomplish the following objectives:

 

 

 

 

Methodology

 

For 2007, we established target levels as a number of shares by salary level. The stock price used to develop the number of shares is based on a long-term average, with the price rounded to the nearest whole dollar. Changes for 2008 are outlined below.

 

Equity Grant Practices

 

All equity grants are issued under the Stock Performance Plan (prior to May 2007) and the EIP (starting in May 2007) and must be approved by the full Board or the appropriate Board committee.

 

Since 1998, annual grants to all employees including executives have been made at a pre-established Committee meeting in early February. This allows sufficient time for the market to absorb announcement of annual earnings, which is typically made during the fourth week of January. We do not time equity grants in coordination with the release of material nonpublic information. The grant price is the closing price on the date of grant.

 

Any occasional special grants to employees who are not executive officers are approved by the Special Stock Performance Committee (consisting of the Chairman of the Board and the Chair of the Compensation Committee), to which the Board of Directors has delegated the authority to approve special equity grants. Grants are effective on the date of Special Stock Performance Committee approval.

 

Equity Vehicle Mix

 

To achieve the various long-term incentive objectives outlined above, our long-term incentive (“LTI”) program for executives consists of one-third each stock options, PSUs and RSUs.

 

25

This balanced program allows us to reinforce specific business objectives, address business circumstances, talent needs and philosophical considerations and support our culture. The following table summarizes the performance drivers, mix and objectives for our LTI components:

 

LTI Mix

 

 

Participation

 

About 2,200 employees, including the CEO and other NEOs, key global leaders, and middle management, received LTI awards in 2007.

 

Target Levels

 

The Committee establishes LTI targets for each participating level at approximately the competitive Market median. Actual grants can range from 0% to 200% of the target for each level of responsibility. The range reflects employees’ current contributions to future strategic value creation as well as future potential to create strategic value for the Company, including the achievement of longer-term critical operating tasks such as driving research productivity, liberalizing key production capacity, developing sales capability and growing sales in emerging markets. Generally, individual LTI awards range from 90% to 110% of target for the respective level.

 

Stock Options

 

Nonqualified stock option grants are typically made annually at the closing price on the date of grant, vest in one-third increments over three years and carry a term of six years, which we believe creates a strong performance and retention incentive.

 

Beginning with grants made in 2003, the Company has expensed stock options. We have never repriced stock options and have no intent to reprice options in the future. A reload feature is available for options granted from 1997 through 2003 to facilitate stock ownership by management. Effective with options granted in 2004, option grants do not include a reload feature and we do not intend to add this feature in the future.

 

PSUs

 

The PSU program ensures both stockholder alignment and focus on business priorities, by clearly communicating what is most important in driving business performance and ultimately creating stockholder value.

 

26

Typically, PSUs are awarded at the beginning of a three-year performance cycle to each executive. At the conclusion of the performance cycle, payouts can range from 0% to 200% of the target grant based on pre-established, performance-based corporate objectives in both revenue growth (versus Peer Group for PSUs issued in 2007) and ROIC (versus an internal target for PSUs issued in 2007) over the three-year performance period. The payout on PSUs granted in 2007 will be determined based on the table below, using the Peer Group that was in effect on the date of grant.

 

Performance Targets

 

 

RSUs

 

RSUs offer a retentive feature to our LTI program and also provide further alignment with stockholders through increased ownership levels. RSUs typically are granted annually and vest over a three-year period.

 

LTI Changes for 2008

 

LTI awards under the Company’s EIP for 2008 were established as a dollar value. The dollar value of an award was translated into an equal mix, by fair value on the date of grant, of stock options, RSUs and PSUs. The formula for determining payouts for PSUs issued in 2008 will be:

 

Revenue Growth Payout % x Target Award x 50%

+

Total Shareholder Return (TSR) Payout % x Target Award x 50%

=

Final Award

 

DuPont Revenue Growth or TSR vs.
Peer Group			Revenue Growth Payout % or TSR Payout %
Below 25th percentile*				0
At 25th percentile*				25
At 50th percentile*				100
At or above 75th percentile*				200
*Interim points are interpolated

 

Benefits

 

Our global benefit philosophy for employees, including the NEOs and other executive officers, is to provide a package of benefits consistent with local practices and competitive within individual markets.

 

Our executive officers participate in the same health and welfare and retirement programs on the same terms and conditions as other employees. For U.S. parent company employees, this offering consists of the following:

 

 

The Pension and Retirement Plan is a tax-qualified defined benefit plan under which benefits are based primarily on an employee’s years of service and final average pay. The Savings and Investment Plan is a tax-qualified defined contribution plan that includes a 401(k) feature.

 

27

In August 2006, the Company announced major changes to the Pension and Retirement Plan. Effective January 1, 2008, eligible full-service employees on the rolls as of December 31, 2006 will continue to accrue benefits in the plan, but at a reduced rate of about one-third of its previous level. In addition, Company-paid postretirement survivor benefits for these employees will not continue to grow after December 31, 2007. Employees hired after December 31, 2006 do not participate in the plan.

 

As part of the retirement plan changes in August 2006, the defined contribution benefits for most U.S. parent company employees are in transition. Effective January 1, 2007, for employees hired on that date or thereafter and effective January 1, 2008, for active employees as of December 31, 2006, the Company will contribute 100% of the first six percent of the employee’s contribution election and also contribute three percent of each eligible employee’s eligible compensation regardless of the employee’s contribution. In addition, the definition of eligible compensation has been expanded to be similar to the definition of eligible compensation in the Pension and Retirement Plan.

 

In addition to these tax-qualified retirement plans, executive officers may participate in nonqualified retirement plans we offer that restore those benefits that cannot be paid as a result of Internal Revenue Code (“IRC”) limits applicable to tax-qualified retirement plans, including:

 

 

These plans apply to all eligible employees who exceed the IRC limits. Retirement benefits in excess of these limits are paid from our operating cash flows.

 

Perquisites and Personal Benefits

 

As a matter of business philosophy, we provide very limited perquisites or personal benefits to senior executive officers (including the CEO). All employees in the Stock Performance Plan or EIP (approximately 2,200 employees) are provided financial education services such as seminars which are focused on assisting employees to achieve the highest value from our compensation and benefits programs. In addition, personal financial counseling (excluding tax counseling) is provided to senior leaders.

 

Company Aircraft

 

The Company aircraft are dedicated primarily to senior management support and are intended for business travel only. An exception is provided for the Chairman and CEO, who is required, under our personal security policy, to use Company aircraft for all air travel needs, including nonbusiness air travel. Costs associated with nonbusiness travel are treated as personal benefits for Mr. Holliday and are disclosed as such in the “All Other Compensation” column in the 2007 Summary Compensation Table on page 34.

 

Our policy regarding use of the corporate aircraft by executive officers is driven by business efficiency considerations and security concerns. The policy is reviewed periodically in light of emerging developments concerning those areas. Changes in levels of security risks in certain countries could, for example, result in modifications regarding use of corporate aircraft to those destinations.

 

The evaluation of the CEO is one of the fundamental duties of the Board of Directors. Following a self-assessment by Mr. Holliday, the independent Board members review the CEO’s performance in executive sessions.

 

28

In addition to independent Board members’ assessment of performance, the Committee considers competitive Market information and reviews the compensation of CEOs of the Peer Group. The Committee also assures that targeted pay equity multiples are met when determining CEO pay recommendations for approval by the independent Board members.

 

In reaching its recommendation on Mr. Holliday’s 2008 base pay, 2007 STIP award and 2008 LTI award, the Committee evaluated Mr. Holliday based on the Company’s overall financial, strategic and operational performance for 2007, progress on long-term strategic objectives, and against the Company’s core values. Specifically, the Committee considered the following factors:

 

 

 

 

 

 

 

 

 

29

 

 

 

Element (Pay Equity
Multiple Range)			Actual 2007					Target 2008
Total Cash (2 - 3 times NEO)				2.7					2.5
Total Direct (3 - 4 times NEO)				2.9					3.1

 

Based on this careful evaluation, the independent members of the Board of Directors approved the following compensation actions:

 

 

For 2007, the Board approved a 2.1% increase in salary to $1,320,000. This increase placed the CEO base salary below the Market median.

 

For 2008, the Board considered external Market information as well as the salary budget increase of 3.75% set for U.S. professional employees and approved a 3.75% increase in salary to $1,369,500. This increase maintains Mr. Holliday’s competitive position slightly below the Market median.

 

 

Mr. Holliday’s STIP award for 2007 was $2,207,000. The computation of Mr. Holliday’s STIP award was consistent with the formula for other corporate employees, reflecting the 111% final performance factor based on corporate and business unit financial results. In addition, the Committee recommended an Individual Performance Factor of 107% to reflect Mr. Holliday’s contribution to strong Company performance.

 

 

After careful review of the Market data, the Committee approved a 2007 LTI award, delivered in an equal mix in value of 228,000 stock options, 42,500 RSUs and 42,500 PSUs.

 

The Board approved an LTI award for 2008 that was equal in value to the LTI award for 2007, which resulted in an award of 408,806 stock options, 48,428 RSUs and 48,428 PSUs. The grant date fair value of the award was $6.5 million, which is approximately 25% below the Market median. The award is also consistent with the Board’s long standing goal of rewarding and retaining executives at levels that (i) reflect past performance and future potential, and (ii) maintain internal consistency.

 

The following provides a summary of Mr. Holliday’s total direct compensation for 2007. Additional information can be found in other sections of this Proxy Statement.

 

CEO		Base Salary				STIP				LTI				Total Direct Compensation
C. O. Holliday, Jr.		$	1,320,000			$	2,207,000			$	6,497,290			$	10,024,290

 

In 2007, compensation for the NEOs was as follows. This information is also reflected in the 2007 Summary Compensation Table on page 34 and the 2007 Grants of Plan-Based Awards table on page 36. The LTI values in the table below (and in the table above for the CEO) indicate the total SFAS No. 123(R) value of LTI awards granted in 2007. These values differ from the values shown in the 2007 Summary Compensation Table, which is prepared under the SEC’s proxy statement disclosure rules and represents the total accounting expense recognized in 2007 under SFAS No. 123(R) with respect to LTI awards.

 

30

In finalizing equity awards, the Committee took into consideration the fair value of the award and not the accounting expense for 2007.

 

The Committee approves compensation actions for the NEOs and all other executive officers, excluding the CEO. The Committee’s decisions are based on a review of an individual executive officer’s contributions during the year as well as on an analysis of the ability of the individual to contribute to the success of the Company in the future. In making its determinations regarding compensation for executive officers in 2007, the Committee reviewed such factors as achievement of cost-reduction goals, improvement in return on investment in research and development, growth in emerging markets, and maintenance of a strong balance sheet, as well as performance on the Company’s core values.

 

This table (and the table above for the CEO) provides for a more concise overview of the Committee’s analysis and decisions and is not a substitute for the information provided in the 2007 Summary Compensation Table or 2007 Grants of Plan-Based Awards table required by the Securities and Exchange Commission and included in this Proxy Statement.

 

 

 

A tally sheet review for each NEO confirmed that the compensation reflected in the table above, when considered in the context of decisions made by the Committee in the past, is aligned with performance and external benchmarks (Market comparisons). The analysis also confirmed that there were no unexpected consequences flowing from past compensation decisions.

 

DuPont generally does not enter into employment agreements (including severance agreements) with executives. The Company’s Career Transition Financial Assistance Plan currently provides termination benefits equal to one month’s pay for each two years of service, with a maximum of twelve months’ pay. For purposes of the Plan, pay equals base salary plus last actual short-term incentive. The program applies to substantially all U.S. parent company employees terminated for lack of work, including executives. On occasion, the Company may negotiate individual arrangements for senior executives and has entered into an agreement with R. R. Goodmanson. For details of this agreement, see Retention Agreement on page 33.

 

DuPont does not currently have Change in Control Arrangements in place. As part of the overall review of compensation policies and programs, this subject is periodically reviewed against market place practices and business necessity.

 

The federal tax laws impose requirements in order for compensation payable to the CEO and certain executive officers to be fully deductible. The Company believes it has taken appropriate actions to maximize its income tax deduction.

 

31

IRC Section 162(m) generally precludes a public corporation from taking a deduction for compensation in excess of $1,000,000 for its CEO or any of its three other highest-paid executive officers (other than the CEO or Chief Financial Officer), unless certain specific and detailed criteria are satisfied.

 

Annually, the Company reviews all compensation programs and payments to determine the tax impact on the Company as well as on the executive officers. In addition, the Company reviews the impact of its programs against other considerations, such as accounting impact, stockholder alignment, market competitiveness, effectiveness and perceived value to employees. Because many different factors influence a well-rounded, comprehensive executive compensation program, some compensation may not be deductible under IRC Section 162(m).

 

The Company will continue to monitor developments and assess alternatives for preserving the deductibility of compensation payments and benefits to the extent reasonably practicable, consistent with its compensation policies and as determined to be in the best interests of DuPont and its stockholders.

 

The Company believes senior executives should have a significant equity position in the Company. Stock ownership guidelines are in place to align executive officers and other senior leaders with the interests of stockholders and to encourage a longer-term focus in managing the Company. The guidelines require that executive officers accumulate and hold, within three years of the date of achieving the various executive levels, shares of DuPont Common Stock with a value equal to a specified multiple of base pay. The multiples for specific executive levels are set forth below:

 

 

An annual review is conducted to assess compliance with the guidelines. The CEO and other NEOs exceed the ownership guidelines.

 

DuPont stock may be held in various forms to achieve the applicable ownership guidelines. These forms include: shares owned outright, shares held in the Savings and Investment Plan, stock units held in the Salary Deferral and Savings Restoration Plan, deferred stock units and RSUs. Unexercised stock options, including vested options, as well as unvested PSUs are not included in determining whether an executive has achieved the ownership levels set forth above.

 

The EIP contains a “clawback” provision under which (1) a grantee forfeits the right to receive future awards under the EIP, and (2) the Company may demand repayment of awards if the grantee engages in misconduct, including grantee’s conduct that (i) results in termination for cause (as defined in the plan), (ii) breaches a noncompete or confidentiality clause between the Company and grantee or (iii) results in the Company restating financial statements due to material noncompliance and the grantee either (A) had knowledge of the material noncompliance or the circumstances that gave rise to such noncompliance and failed to take reasonable steps to bring it to the attention of appropriate individuals within the Company or (B) personally and knowingly engaged in practices which materially contributed to the circumstances that enabled a material noncompliance to occur. A grantee is entitled to a hearing before the full Committee at which the grantee may be represented by counsel. Consistent with the standard applicable to other Board and Committee actions, the decision of the Committee is effective if approved by the majority of the Committee’s members.

 

Awards granted under the Stock Performance Plan are subject to forfeiture if the Committee determines, after a hearing, that the grantee willfully engaged in any activity harmful to the interest of the Company. The Stock Performance Plan does not define specific instances of misconduct. Rather, what constitutes “activity harmful to the interest of the Company” is a determination made by the Committee based on the facts and circumstances in the situation at issue.

 

32

 

R. R. Goodmanson